Ethiopia: Takaful legislative framework needed to realise market potential

Source: Middle East Insurance Review | Mar 2026

Ethiopia’s takaful sector reported 92% growth in 2025, but the contribution of the takaful insurance market to the overall gross written premium of the Ethiopian insurance industry was less than 1%.

The country’s growing Muslim population is expected to be a driving force for the takaful market, whose development is hampered by the lack of innovative Islamic insurance products, said Mr Fikru Tsegaye, writing for BirrMetrics, a digital news media outlet. He is a certified insurance and reinsurance professional with two decades of experience in the industry.

Takaful product development is still at a nascent stage, because Islamic insurance was introduced in the country in June 2020. In some cases, existing conventional plans are simply named as takaful products. Current trends show that the takaful market in Ethiopia has potential, provided the Islamic insurance products are offered bundled with other financial services.

At the end of 2025, seven insurers were licensed to provide takaful services in Ethiopia, including as window operators.

Hurdles

There are many hurdles to overcome for the takaful market to realise its potential. These include:

The gap in understanding the difference between conventional insurance and takaful and the misconceptions associated with that, such as that takaful is not exclusively for Muslims.
The lack of skilled and qualified manpower both in the takaful entities and the regulatory authority. Aggravating matters, there is no training institution or academic body to develop the required talent for Islamic insurance.
The absence of an enabling legal and regulatory framework for developing takaful services. Currently, there is a regulatory guideline that barely addresses the necessary regulatory infrastructure that could spur the development and growth of the takaful business. Ethiopia needs a comprehensive Takaful Insurance Act to address all legal and regulatory issues concerning takaful operations.
The absence of a clear marketing strategy and promotion of takaful services. Companies should have a dedicated unit for takaful marketing and branding efforts. M

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